Status:  (1) Abandoned; (2) Upcoming/New Filing

Acquirer:  Orient Hontai Capital (China); Orient Securities Limited (China)

Acquired:  AppLovin Corp. (US)

Value:  (1) US$1.4 billion acquisition; (2) US$841 million debt financing

Industry:  Software; e-Commerce

In 2016, AppLovin Corporation, a mobile advertising company, agreed to be sold to China based private equity firm Orient Hontai Capital, “a subsidiary of Orient Securities Capital Investment Company Limited, which is wholly-owned by Orient Securities Company Limited.”  (See AppLovin Press Release, Orient Hontai Capital Takes a Majority Stake in AppLovin, Sept. 26, 2017.) “Orient Hontai has devoted significant resources in the Chinese mobile advertising market and has built strong connections with leading companies in this area.” (Id.)  On November 21, 2017, Reuters reported that the deal was abandoned due to CFIUS concerns about “the security of the company’s data.”  (See Reuters, Exclusive: AppLovin tweaks Chinese takeover deal after U.S. pushback, Nov. 21, 2017; see also VentureBeat.com, AppLovin’s acquisition by Orient Hontai is off, accepts $841 million investment instead, Nov. 21, 2017 (article cited on AppLovin’s press webpage here).)

Also on November 21, 2017, AppLovin stated that Orient Hontai Capital had already invested $140 million in AppLovin, resulting in a 9.98% ownership stake, and the parties made a new $841 million debt financing agreement. (See AppLovin Blog, The next phase for AppLovin, November 21, 2017.) According to AppLovin, “the debt financing allows us to maintain full control of our business while accessing additional capital to help finance our continued global growth.” (Id.)  According to Reuters, “AppLovin and Orient Hontai have notified CFIUS of the new arrangements, but they do not believe the new deal will be scrutinized by CFIUS because it does not give Orient Hontai any control of the company.” (Reuters, Exclusive: AppLovin tweaks Chinese takeover deal after U.S. pushback, November, 21, 2017.)